Developer to get more time to save historic Palmer Park building

Owner Kathy Makino of Shelborne Development has struggled to finance mixed-use redevelopment

City prepared to give owner more time to secure funding

Delmar apartment building's roof is collapsed, but demolition on hold

Annalise Frank/Crain's Detroit Business

A notice of demolition was spotted in late August on the Delmar apartment building at 17111 Second Ave. in Detroit's Palmer Park neighborhood. An inspection after the notice was posted found that the building's owner, Kathy Makino, had made improvements and a city official said Detroit plans to speak with her about "options for saving the structure."

Demolition preparations are halted for now as owner Kathy Makino of Shelborne Development works to finance a mixed-use redevelopment in Detroit.

The city of Detroit plans to give the owner of an apartment building in a historic district of Detroit's Palmer Park neighborhood more time to save the structure.

A demolition notice was posted on the red-bricked, 93-year-old Delmar building at 17111 Second Ave. in late August, prompting concerns about its survival. It looks intact from the front, but the collapsed roof remains a concern.

Owner Kathy Makino, founder of Detroit-based Shelborne Development Corp., said she has struggled to finance a mixed-use redevelopment there. She said she wants to move forward, but would hand off the project to another developer if they felt they would have more success.

The notice was posted as the city began environmental and structural assessments to prepare for a possible demolition, after the owner did not make all improvements required under an agreement, Detroit corporation counsel Lawrence Garcia said in an emailed statement.

The consent agreement dated June 6, 2016, and extended July 5, 2017, gave Makino various lengths of time, most around a year, for securing and stabilizing the building and removing blight, according to a copy obtained by Crain's.

The city has halted its demolition preparations for now and is "prepared to" give Makino more time to secure funding assistance, based on progress it saw Sept. 4 in a reinspection. Some concerns remained, including the collapsed roof, Garcia said.

The law department has not yet determined the length of the next extension, city spokesman John Roach told Crain's in an email. But it would require more cleaning and boarding up, producing a development plan by a yet-to-be-determined date and acquiring permits (after completion of the development plan) to begin roof and rear-wall repairs within six months.

Annalise Frank/Crain's Detroit Business.

A sign seen in late August on the Delmar apartment building in Detroit's Palmer Park neighborhood shows preparations for a possible demolition had begun. But since Tuesday, they have been halted for the time being as the city of Detroit says it is "prepared to" give the owner, Kathy Makino, more time to secure financing for redevelopment.

"It would be preferable to see this owner preserve and rehab the building," Garcia said in the statement. "To that end, the Housing & Revitalization Department will speak with the owner to explore options for saving the structure."

She purchased the Delmar from the Wayne County treasurer in 2009 for $1,200, according to city records. Shelborne Development has spent $300,000 removing graffiti, cleaning up the site, boarding it up, on carrying costs, performing due diligence and completing financing applications for funding, Makino said.

"We keep applying for financing (through the Michigan State Housing Development Authority) and it's been a little difficult getting (low-income housing) tax credit awards in the last several years, but we haven't given up, so I was surprised (to see the demo notice)," Makino said. "It's just difficult, these buildings, you buy them in this deteriorated state. All we're doing is trying to save this building."

If another developer "has a plan" and thinks they could get it done sooner, "I'm happy to let them have a shot at it," she told Crain's.

She also said she has searched for a nonprofit partner, reached out to "market rate" developers and reached out to the city of Detroit regarding its permanent supportive housing program. The next two submission deadlines for the MSHDA funding are in October and April.

Keeping the project focused on senior housing has added difficulty, Makino said, as has its proximity to a methadone clinic, New Light Recovery Center.

No demolition permit had been issued nor contracts awarded. But if the city did decide to tear down the long-vacant, U-shaped Delmar building, it would require historic district commission approval, Brian Farkas, the Detroit Building Authority's director of special projects, confirmed in an emailed statement.

The company has invested around $70 million so far in the Palmer Park area, including finishing its six-building, 202-unit Palmer Park Square project. It also announced plans in April to partner with a nonprofit to redevelop a southwest Detroit apartment complex.

Makino's KSM Holdings LLC has received around 10 blight violation tickets for 17111 Second Ave., the Delmar, between 2015 and 2018, according to city records. It incurred fines totaling about $2,000. The violations range from failure to maintain ($750) to failure to remove graffiti ($100) and failure to keep property or sidewalks free from waste ($50).